Hansapank                     NEWS RELEASE                      12/17/2002



STRATEGY UPDATE FOR 2003



Following a successful year marked by the II pillar pension project in

Estonia, improvement of profitability in Latvia and the completion of

LTB integration in Lithuania, Hansabank updates its corporate

strategy, setting the priorities for 2003.



Who is our customer?

Hansabank primarily focuses on medium-sized companies and private

individuals with above the average purchasing power; however, as a

universal bank, we serve all customer groups.

Our home market is the Baltics, but we also serve niche segments in

Russia.



What are our value propositions to the customer?

In customer relations, we value long-term partnerships. We believe

that in an increasingly competitive environment the key competitive

advantage we have and are able to sustain is the combination of easy

access to financial services, knowledge of our customers, reliability

of our technology and readiness of employees to create solutions for

customers. We believe in the "one-stop-shop" strategy: all financial

services from one place.



How can we do this efficiently?

1. By customer relationship management

The importance of proactive customer relationship management has

become vital for success. In a situation where the intensive use of

remote channels by our customers leads to fewer customer contacts, we

must dedicate extra effort in maximizing the value of the customer

data at our disposal. The desired outcome is a holistic picture of our

customer in every interaction, which allows us to offer the most

suitable financial solutions.



2. By making use of excellent crediting know-how and skills

Excellent credit skills help us understand clients’ needs and with

best know-how we can maintain a better asset quality than the market

in general. At the current stage of market development the main growth

engine for us is the growth of credit portfolio.



3. By efficient technology

Centralized IT development and management complemented with Pan -

Baltic product development enables us to operate more efficiently in

all the three countries.



4. By efficient distribution

Via a wide ATM network, excellent Internet, telephone and mobile bank

we offer to our customers convenient and easy access to financial

services and our branch offices function as advisory and sales

centres. To find solutions for financial matters of our large customer

base we offer them a selection of simple and easy-to-use standardized

services.





GROUP PRIORITIES FOR 2003

1. To increase the loan portfolio in Latvia and Lithuania

Our biggest growth opportunity is in Latvia and Lithuania - total

lending to GDP ratio is 16 per cent in Lithuania, 37 per cent in

Latvia and 46 per cent in Estonia. The biggest value driver is SME

lending and mortgages, we also see potential in consumer finance.



2. To develop a group-wide knowledge sharing framework

Our home markets are in different stages of development, but we

believe that harmonization and integration of the Baltic financial

markets continues. We have a unique opportunity to make use of the

development gap between the three countries - learn from experience or

adopt solutions that have proved to be successful in other business

units.



3. To implement fully Pan-Baltic product development

We have a similar technological solution in all the countries, which

makes us more efficient. Product development must also be centralized

in order to keep IT systems similar and use development resources

efficiently.





FINANCIAL OBJECTIVES (medium-term)

The Baltic countries are set to join the European Union (EU). Interest

margins have already decreased considerably to reflect the improved

risk profile and approaching EU accession. We believe this trend to

continue, although at a slower pace. Hansabank Group has decided to

revise its medium-term financial targets to reflect the on-going

convergence to the European economic area.



1. Double the operating profit in 4 years

The Group’s primary financial target will remain to double the

operating profit (before taxes) every 4 years.



2. Cost-income ratio below 50%

In an environment of increasing competition and lower margins,

internal efficiency is of increasing importance. Hence, the Group will

focus on containing cost growth and will aim to reduce the cost-income

ratio below 50%. Hansabank’s cost-income ratio was raised over 50% by

the acquisition of the Lithuanian Savings Bank in 2001. Excluding the

effect of the said acquisition, Hansabank has always been able to keep

the cost-income ratio below 50%.



3. Net risk cost below 0.6%

The recent sovereign rating upgrades of all three countries by Moody’s

Investors Service reflect the improving risk environment in our

region. Hansabank shares this view and has made its net risk cost

target more aggressive by lowering it from 0.8% to 0.6% (as an average

over a business cycle).



4. ROE at least 20%

Thanks to high profitability and excellent credit quality, Hansabank

Group continues to have a solid capital base. This has allowed the

Group to formalise its dividend policy, targeting a 30% pay-out ratio.

Nevertheless, the Group will remain strongly capitalised, which has a

negative effect on our return on equity. To take into account the

Group’s high capitalisation, the Board has decided to lower the mid-

term ROE target from 25% to 20%.



Our strong market position in each of the three Baltic countries

affords us confidence for the future. We continue to expand

organically but are also open to attractive acquisition opportunities.

We remain a growth-seeking organisation, backed by high level of

expertise and strong capital base.





Mart Tõevere

Head of investor relations

+372 6131 569